1000 Megawatts and Counting: US Solar Installations Shine Bright
According to a report by the Solar Energy Industry Association (SEIA), Q3 2011 solar installations in the U.S. smashed previous records with 449 megawatts of new capacity in just three months. This increase represents attainment of a yearly milestone of 1,000 megawatts in solar installations, surpassing the 887 megawatts completed throughout all of 2010. This 140% growth year-over-year would be impressive trending numbers in any industry.
As the wholesale price of solar panels continues to drop – a study published in Renewable and Sustainable Energy Reviews indicates a decline between late 2009 and mid 2011 of as much as 70% – the cost of traditional “grid” electricity generated by coal and gas plants has been steadily increasing. As described in a recent FastCompany article, “As those two trends continue, solar electricity will soon become as cheap and cheaper than regular retail electricity. That moment is called ‘grid parity’ (i.e., when solar reaches parity with grid electricity) and it’s exciting because once we reach grid parity, solar power won’t just be the eco-friendly option—it’ll also be the economical option.”
What does this trend mean to business owners?
For many business owners, decision to go solar is purely pragmatic and financial. Decreasing costs of solar panels, along with tax incentives and more readily available leasing options, are fueling growth and making the specter of going green more attractive to those focused purely on bottom line measures.
Erica Lynn Johnson, Director, Community Relations & Development with Sullivan Solar Power, describes the impact of lowering costs and more flexible arrangements as follows:
“As solar energy becomes more heavily adopted, … more and more financing options exist. As a result, solar energy is now at a tipping point where it is becoming available to the masses and you don’t necessarily have to come up with the upfront cost to purchase the equipment. Leases or Power Purchase Agreements (PPA’s) allow most people to go solar for a monthly payment less than their current electric bill with little to no upfront cost. “
To what extent are decisions driven by government subsidies or tax credits?
SEIA warns that solar’s growth is threatened by the potential expiration of the Treasury Department’s 1603 Program which provides a cash grant in lieu of a tax credit. While 1603 payments are not made until after the energy property is placed in service, and the phase-out for construction start dates is upon us, it is a powerful incentive, even with these restrictions.
Johnson offers another perspective, stating that the Federal Tax Credit still provides incentives to go solar. “It is a one-to-one credit against tax liabilities, not a write-off and covers 30% of the out-of-pocket cost. This is scheduled to last through 2016. And even in utility territories in which the rebates are extremely low, the continued deployment of solar has not been slowed.”
If this year’s 1000+ MW milestone is any indication, any shortcomings of the respective incentive programs don’t seem to be dimming the widespread implementation of solar power.